Many Iowa college students will be heading back to campuses in the coming days and Iowa Attorney General, Tom Miller, is urging families to review their financing options. Filling the gap in college financial aid packages may require private financing, but shopping around is the only way to ensure you are getting the best interest rates. The Attorney General’s Office conducted a survey of student loan lenders to better understand the state of private funding. This included a total of 7,803 fixed interest rate loans from 10 lenders. The survey revealed the overall rates followed the current interest rate declines and that, surprisingly, a high credit score doesn’t necessarily mean the borrower will receive the lowest rate available. In some instances, the borrower with the excellent score received the same or higher interest rate than a borrower with a poor credit score—however, on average, the higher score did correlate with lower interest rates. This discrepancy is why families are being urged to shop around. The Attorney General’s Office survey also found that variable loan rates could become quite expensive and that advertised rates don’t always match reality. Lenders often advertise their lowest rate, even though most borrowers won’t qualify. Miller’s office offers 10 tips for better borrowing that include: exhausting all other payment options first, knowing your credit score and what that is worth, shopping around, passing on the first offer, do not fear credit inquiries, don’t be fooled by teaser rates, assess associated fees, understand the terms of each loan, understand the risks of variable loan rates and do not borrow more than is needed. More information is available at the Attorney General’s website, a link to which can be found below.
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Iowa Attorney General website: https://www.iowaattorneygeneral.gov/